{"id":5068,"date":"2014-02-16T17:52:21","date_gmt":"2014-02-16T17:52:21","guid":{"rendered":"https:\/\/coopsy.co.uk\/thenews\/?p=5068"},"modified":"2014-04-04T10:42:48","modified_gmt":"2014-04-04T10:42:48","slug":"should-i-buy-bank-shares","status":"publish","type":"post","link":"https:\/\/the-news.uk\/index.php\/news\/2014\/02\/should-i-buy-bank-shares\/","title":{"rendered":"Should I Buy Bank Shares?"},"content":{"rendered":"<p><strong>By William Mills<\/strong><\/p>\n<p><strong><\/strong>The shares of the big banks were under the spotlight last week with the publication of 2013 results for both Barclays and Lloyds. In a series of articles we will look at some of the information which goes into deciding whether or not to buy or sell shares.<\/p>\n<p><strong>Lloyds Banking Group<\/strong><\/p>\n<figure id=\"attachment_5069\" aria-describedby=\"caption-attachment-5069\" style=\"width: 337px\" class=\"wp-caption alignleft\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-5069\" alt=\"photo of Lloyds Bank branch\" src=\"https:\/\/coopsy.co.uk\/thenews\/wp-content\/uploads\/lloyds-bank-branch-2.jpg\" width=\"337\" height=\"374\" srcset=\"https:\/\/the-news.uk\/wp-content\/uploads\/lloyds-bank-branch-2.jpg 337w, https:\/\/the-news.uk\/wp-content\/uploads\/lloyds-bank-branch-2-270x300.jpg 270w\" sizes=\"auto, (max-width: 337px) 100vw, 337px\" \/><figcaption id=\"caption-attachment-5069\" class=\"wp-caption-text\">Lloyds Bank<\/figcaption><\/figure>\n<p>A year ago <strong>Lloyds<\/strong> languished at 46p and pundits hailed them as &#8216;un-investable.&#8217; Since then they rushed up peaking at 86p before falling back to around 80p.<\/p>\n<p>The share sallied forth on vague promises of hoping to resume dividend payments in the near future. Dividends on ordinary shares were stopped some years ago and need the authorities&#8217; approval before they can be resumed again. But even if permission was granted, are <strong>Lloyds<\/strong> in any position to afford them?<\/p>\n<p>Under the Companies Acts it is not permitted to borrow to pay dividends. These must be paid out from either current profits or retained earnings. <strong>Lloyds<\/strong> 2013 Accounts have it still making a 1.2p loss per share on its 71 billion issued shares and its Balance Sheet shows retained earnings have dropped to \u00a34 billion or 5.6p per share.<\/p>\n<p>So if <strong>Lloyds<\/strong> paid a 4% dividend on its current price of 80p at 3.2p per share it would cost \u00a32.27 billion wiping out over half of its retained earnings.<\/p>\n<p>In contrast rivals <strong>HSBC<\/strong> and <strong>Barclays<\/strong> have very different numbers.<\/p>\n<p><strong>HSBC<\/strong> with 19 billion shares in issue has retained earnings of \u00a375 billion,or \u00a33.95 per share from which to pay dividends .<\/p>\n<p><strong>Barclays<\/strong> 16 billion shares have \u00a333 billion in their retained earnings pot equalling \u00a32.06 per share.<\/p>\n<p>At the moment <strong>HSBC<\/strong> are paying a 4.5% dividend on its current share price, and Barclays just over 2%. With virtually no retained earnings to rely on <strong>Lloyds<\/strong> should not only wait until it is firmly in profit but also give itself time to build up its reserves before paying a dividend.<\/p>\n<p>Having let the press speculate that a dividend payment is imminent <strong>Lloyds&#8217;<\/strong> management might find themselves in a further fix if they paid a tiny amount which would then be compared with the pay outs of its rivals forcing its own share price down.<\/p>\n<p>The creative accountancy path is full of potholes too. If large chucks of the business are sold with an arbitrary allocation of costs resulting in a capital gain then of course the profit would be recorded in the Profit and Loss Account and available for distribution. But in doing so they may artificially create a tax liability as well.<\/p>\n<p>Still if it gets the shareholders a dividend and the directors a bonus?<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By William Mills The shares of the big banks were under the spotlight last week with the publication of 2013 results for both Barclays and Lloyds. In a series of articles we will look at some of the information which goes into deciding whether or not to buy or sell shares. Lloyds Banking Group A [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[438,375],"tags":[531,724,791],"class_list":["post-5068","post","type-post","status-publish","format-standard","hentry","category-financials","category-news","tag-barclays","tag-hsbc","tag-lloyds-bank"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.7 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Should I Buy Bank Shares? - THE NEWS<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/the-news.uk\/index.php\/news\/2014\/02\/should-i-buy-bank-shares\/\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Should I Buy Bank Shares? - THE NEWS\" \/>\n<meta property=\"og:description\" content=\"By William Mills The shares of the big banks were under the spotlight last week with the publication of 2013 results for both Barclays and Lloyds. 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